1. IT Parks A catalyst for growth* *connectedthinking

2. IT sector defined PricewaterhouseCoopers | 3 Goods  Electronic Data Processing (EDP) and office equipment  Telecommunication equipment  Integrated circuits and electronic components Services  System integration, software development and maintenance, information technology infrastructure management etc.  Business process outsourcing: Customer care & support, finance & accounting, human resources, content development etc.

3. IT and Development PricewaterhouseCoopers | 3  Contribution to GDP > Domestic and export value-added  IT usage by citizens > informed and connected society with “global” expectations  e-Government > Citizen service delivery – transparency, effective monitoring and productivity  IT in business > Operational efficiencies and productivity

4. Global IT Sector…Key players PricewaterhouseCoopers | 3 USA Ireland Japan South Korea China Philippines Singapore Malaysia India Goods Services UK Canada Germany Mexico ServicesEDP & Office EqpmtTelecom EqpmtIC & Components EU Source: WTO Trade Statistics, 2004 and PwC analysis

5. ICT Development Indicators PricewaterhouseCoopers | 3 ParametersKoreaMalaysiaChinaIndiaUnited States JapanGermanySingapore Social Indicators Total Population (millions) Urban Population (%of total population) 48 81 25 64 1296 40 1080 29 294 80 128 66 83 88 4 100 ICT Sector Indicators Telephone lines (per 1000) Internet users (per 1000) Personal computers (per 1000) Mobile Subscriber (per 1000) Population covered by mobile Telephony (%) 467 656 558 760 99 176 392 170 573 96 241 73 40 258 73 43 23 11 48 41 606 569 760 615 95 531 606 425 669 99 660 472 440 858 99 430 559 565 891 100 Broadband subscribers (per 1000) International Internet Bandwidth (bits/person) 247 993 10 127 17 57 0.6 4 129.1 3308 145.8 1038 83.6 6850 118 5699 ICT Expenditure (% of GDP)6.66.95.33.78.87.45.710.4 Source: World Bank, UNDP, ITU and others

6. IT Parks: Sample for assessment PricewaterhouseCoopers | 3  Focus on “developing” countries at a relatively lower level of ICT maturity  Mix of successful and “not so successful” IT Parks ParkCountryYearOccupancy Singapore Science Park (SSP) Singapore1984> 150 IT companies Taedok Science Town (Taedok) South Korea1983> 350 IT companies Hitec City, Hyderabad (Hitec) India1998> 150 companies IT Park, Hubli (Hubli)India2002< 10 companies Zhongguancun Science Park (ZSP) China1991> 200 medium size IT companies Cyberjaya Flagship Zone (CFZ) Malaysia1998> 100 companies

7. The “CLIP” framework PricewaterhouseCoopers | 3 Sources of Debt Ownership Venture Capital Capital Business Incubator Anchor Tenants Market Value Chain Centers of Excellence Internal Services Linkage Land Physical Infrastructure Communication Infrastructure Environment Social Infrastructure Quality Throughput Salary People

8. Capital PricewaterhouseCoopers | 3 Owned and operated by Ascendas Pty; Significant initial support from the Government through relocation of key institutions; Business incubation services offered to start-up companies; Large number of anchor occupants like Lucent, Sony, Silicon Graphics etc. SSP, Singapore Promoted and managed by the State Government; Business incubation services offered to start-up companies by the state-owned Software Technology Parks of India IT Park, Hubli, India Promoted & managed by a joint venture L&T Infocity, with shareholders being Larsen & Toubro, State Government and Ascendas; Primarily occupied by large companies like HSBC, Microsoft, IBM, Motorola, CSC, Oracle etc. Hitec City, Hyderabad, India Promoted and managed by the Government; Significant Government support initially through relocation of key institutions; Business incubation services offered to start-up companies; Dedicated venture capital fund and occupants like LG, Samsung Taedok, South Korea Promoted by Government and managed by different Government bodies; Business incubation services offered to start-up companies; Dedicated venture capital funds managed by municipal Government; Anchor occupants like Stone, Microsoft, IBM etc. ZSP, China Promoted by a joint venture company between the Government and private companies; Managed by Multimedia Development Corporation, a Government company; Business incubation services to start-up companies; Anchor occupants like HSBC, EDS, Motorola, Ericsson, Nokia etc. CFZ, Malaysia

9. Linkages PricewaterhouseCoopers | 3 Products primarily include EDP & office equipment, IC & components etc; R&D support from The Centre of Wireless Communication and The Institute of Microelectronics, NUS and Singapore University; Facilitation services by Ascendas & partners SSP, Singapore Primarily BPO Services with export focus but lacking depth; No significant requirement of R&D support IT Park, Hubli, India Primarily IT and BPO Services with export focus; No significant requirement of R&D support; A number of occupants like HSC, Google operate as global shared services centres Hitec City, Hyderabad, India Products include EDP & office equipment, telecommunication equipment & software etc.; R&D support through Electronics & Telecom Research Institute, KAIST, Chungnam University etc. Regular fairs and events for technology partnerships Taedok, South Korea Focusing on EDP & office equipment, Software and IT Services for domestic and export market; R&D support from Qinghua and Beijing University, Chinese Academy of Science; Facilitation services at the incubation centres ZSP, China Primary focus on IT & BPO services for exports in the global shared services centre model; No significant requirement of R&D support; Significant e-Government related business opportunities in Malaysia, facilitated by Multimedia Development Corpn. CFZ, Malaysia

10. Infrastructure PricewaterhouseCoopers | 3 Within 30 minutes from Changi International Airport; Low occupancy charges; Leveraging the urban & social infrastructure of Singapore together with data & voice connectivity SSP, Singapore More than 8 hours from Bangalore International Airport; Optical fibre networking within the Park by Software Technology Parks of India (STPI) and then through 1 Mbps satellite gateway; Urban and social infrastructure at Hubli appears inadequate IT Park, Hubli, India Within 30 minutes from Hyderabad International Airport; Data connectivity through the VSNL hub within the Park and STPI; Optical fibre networking within the Park; Leveraging the urban and social infrastructure of Hyderabad city Hitec City, Hyderabad, India Within 30 minutes from Cheon Gju International Airport; Well connected through road & rail network; Own urban and social infrastructure in the form of residential clusters with all amenities, recreation halls, swimming pools Taedok, South Korea Within 30 minutes from Beijing International Airport; Optical fibre networking within the Park and then International Gateways at Beijing; Leveraging the urban and social infrastructure in Beijing ZSP, China Within 45 minutes from Kuala Lampur International airport; External connectivity through 2.5-10 Gbps optical fibre backbone and international gateway at Kuala Lampur; Own urban and social infrastructure in the form of residential clusters with all amenities; Leveraging the urban & social infrastructure of Kuala Lampur CFZ, Malaysia

11. People PricewaterhouseCoopers | 3 Around 7,000 research engineers, scientists and support staff deployed; Proximity to NUS, Nanyang Technological University, Ngee Ann and Singapore Polytechnics; Average annual salary of USD 40,000 at the middle management level SSP, Singapore Around 100 engineers, IT specialists deployed; More than 75,000 IT professionals, engineers, MBAs from 19 universities and over 100 colleges in Karnataka annually; Average annual salary of USD 8,500 at the middle management level IT Park, Hubli, India More than 20,000 engineers, MBAs, IT specialists and graduates deployed; More than 150,000 resources from 23 universities and over 200 colleges in Andhra Pradesh annually. Average annual salary of USD 8,500 at the middle management level Hitec City, Hyderabad, India Over 25,000 IT specialists, R&D experts deployed; Houses the Korea Advanced Institute of Science and Technology, Chungnam National University and Chungnam college Teadok, South Korea 30,000 IT specialists, engineers, scientists annually from over 68 Universities & colleges in region, prominent being Beijing University, Qinghua University and Chinese Academy of Science; Average annual salary of USD 8,800 for middle management ZSP, China More than 10,000 IT specialists, engineers and graduates deployed; Houses the Multimedia University and LimKokWing University College of Creative Technology; Average annual salary of USD 19,900 at the middle management level CFZ, Malaysia

12. The 7 Divine Virtues PricewaterhouseCoopers | 3  Having the right product-services mix is critical  A supportive and proactive Government is key  World class physical and virtual infrastructure represent bare necessities  A judicious mix of anchor occupants and smaller companies help

13. The 7 Divine Virtues, cont. PricewaterhouseCoopers | 3  Availability of angel investment, venture capital and private equity financing are essential pre-requisites  Linkages with centres of excellence are critical for select products & services, while skill linkages are essential for all  A vibrant and pro-active IT park management team represents an added advantage

14. Thank You *connectedthinking © 2006 PricewaterhouseCoopers Pvt.Ltd. All rights reserved. Roopen Roy Email: roopen.roy@in.pwc.com Tel: +91 (33) 2485 8891 +91 (33) 2357 7207 +91 98302 55522

15. Case Study: India

16. $18.2bn IT-ITES exports from India grew $23.9 bn $13.3 bn FY 2003-04 FY 2005-06 FY 2004-05 India: The IT Growth Story PricewaterhouseCoopers | 3

17. The IT-ITES industry has grown at a CAGR of over 28 per cent since FY 1999-2000.  Indian IT-ITES industry continues to chart remarkable double-digit growth for the nth successive year and it crossed $36 billion in annual revenue in FY 2005-06, a growth of nearly 28 per cent  Export earnings accounted for 64 per cent of the total IT-ITES aggregate in FY 2004-05  IT-ITES exports from India grew from $13.3 billion in FY 2003-04 to $18.2 billion in FY 2004-05. The total IT-ITES exports from India exceeded $23.9 billion in FY 2005-06  Software and services exports (excluding hardware) are projected to grow at 32 per cent in the current fiscal India: The IT Growth Story PricewaterhouseCoopers | 3 Source : Nasscom

18.  Indigenous players start cross-border acquisitions  Win bigger deals  Grow organically in other low-cost nations  Service portfolio expands into higher value-added activities Made in India MNCs Global Delivery Model Matures PricewaterhouseCoopers | 3

19. The evolution: Phases of growth* * *

20. 1986: DOEannounces softwarepolicy 1991: Setup ofSTPI Building the base 1993: STPI sets upgateways 1998: National IT Taskforceby Govt. of India 2000: TelecomDeregulation 2001: Formationof MCIT 70s80s90s2000s Regulatory Measures New IT Policy Reversal of Liberalization Revived liberalization Aiming at SuperpowerStatus 1987: Texas instrumentssets up first gateway fordata com IT Industry: Timeline PricewaterhouseCoopers | 3

21. 1970 1960 1980 1990 2000 TATA sets up TCS, India’s first Software company TCS begins exporting, beginning of Indian Software Industry Industry begins to flourish, with many software companies joining 1992 1994 1996 1998 Onsite services (Body Shopping) Offshore Methodology, Satyam and Infosys list on BSE Software exports mostly low end services, based on transient demand for things like Y2K Bug, etc. Software companies move up the value chain, capturing markets in niche areas and set high quality standards PricewaterhouseCoopers | 3 IT Industry: Timeline

22. Phase I 1985-95Phase II 1995-00Phase III 2001-04Phase IV 2005-2007 Period Notes; SI: System Integration; NM: Network Management; Pack Soft: Package Software India’s big 5 enter global league Size of Industry Service Lines Delivery Model Industry Structure Peak Contract Size Customer Profile Industry value to customers Negligible Under $1 billion US$ 6 billion US$ 14 billion plus App dev & Maintenance + E-biz, ERP, Y2K + SI, NM, Pack Soft, BPO, Products, Tech + IT consult, IT Outsourcing Staff Aug., Onsite Onsite, Offshore Global Delivery Large no. of startups Big 5 increase share and SME growth Mid-size expand, Big 5 grow and niche firms emerge Big 5 in global league < US$ 5,00,000 = US$ 5 million = US$ 40 million = US$ 100 million Large Fortune 100 Large Fortune 500 Global 2000Global 5000 Lower costs + quality, productivity + security, data protection, process mgt + business innovation PricewaterhouseCoopers | 3

23. The Evolution of India’s IT industry PricewaterhouseCoopers | 3 Pre-1984:  Government focused on self-reliance in hardware  Exit of IBM, on account of restrictive Foreign Exchange Regulation Act (FERA) rules;  Impact on fledging software and IT firms 1985–1991:  Worldwide crash in hardware prices  De-regulation of import licensing policy in India  Large multinational firms moved from mainframe to client–server systems.  Acceleration in demand for software programming services  From 1986, software policy de-linked from indigenous hardware 1992–1999:  Full financial liberalization followed by large-scale entry of MNCs  Phenomenal growth in demand for software services.  STPI scheme established to offer infrastructure, low-cost connectivity and plug-and-play facility for SMEs and other enterprises. 2000 onwards:  A slowdown in the demand for software services  Expansion in the demand for outsourcing

24. In early 90s, the main hurdles identified in the path of India becoming an attractive destination for software development and outsourcing were:  Bureaucracy and cumbersome govt. procedures  Poor communication infrastructure  Limited access to financial resources  Limited access to emerging technologies  Lack of information about international IT market The 90s hurdles PricewaterhouseCoopers | 3 Restrictive Policies

25. STPI: A revolutionary concept

26. Established by the government in 1988 STPs are autonomous bodies to encourage and support small software exporters They offered:  100% export-oriented firms a tax-free status for 5 years within the first 8 years of operation  Office space and computer equipment, access to high-speed satellite links  Uninterrupted supply of electricity  Services such as import certification, software valuation, project approvals, market analysis, marketing support and training  Single-window clearance for projects  STPs connected by an integrated network  Point-to-point digital channel  Access to the internet with subscriber owned TCP/IP number, providing  e-mail, remote log in, file-transfer services and access to the WWW STPI: A landmark policy change PricewaterhouseCoopers | 3

27. Earth Station STPI Satellite Connectivity Customer Premises Foreign End Service provider Customer’s Foreign Office International Fiber Connectivity International Connectivity Architecture PricewaterhouseCoopers | 3

28. STPI has introduced ultra-modern office facilities available to small units and entrepreneurs with minimal capital expenditure. This plug-and-play office space is uniform across India Facilities Available:  Fully Furnished office space  Latest Computer Workstations  Broadband Internet Access  Fully Air-conditioned spaces  24x7 Power Backup  Complete Business Center Support Incubation Facility PricewaterhouseCoopers | 3

29. Technology Parks: meeting the challenges PricewaterhouseCoopers | 3 India’s STPI strategy addressed a range of mission critical issues that led to the IT services export boom. These were: Issues Infrastructure Telecommunication Bureaucratic hurdles Govt. Policy SME Startup challenges Access to talent STPI Service Plug-and-play facilities (Office space, HW & SW Support, training facilities) International Private leased circuits (IPLC) Broadband Internet access Single window clearance for projects Custom bonding facilities Fiscal Relief: Tax free status for 100% EoUs Incubation support Full Corporate Income Tax exemption for 10 years Full Import duty exemption on goods 100% Foreign Equity participation Providing access to VC Funding firms Linkages with IITs, IIMs, Engineering Colleges, Technology incubators

30. Software exports boom* *

31. Software Exports Software Exports (in Rs Crores) PricewaterhouseCoopers | 3

32. 19911995 After IT Taskforce  Bangalore  NOIDA  Pune  Hyderabad  Trivandrum  Ghandinagar  Bhubaneswar  Mohali  Jaipur  Mumbai  Aurangabad  Bhilai  Chennai  Coimbatore  Dehradun  Guwahati  Hubli  Indore  Kanpur  Kolkata  Lucknow  Nasik  Allahabad  Jodhpur  Jammu  Hubli  Mangalore  Manipal  Madurai  Mysore  Nagpur  Pondicherry  Pune  Rourkela  Srinagar  Shimla  Thirupati  Trichy  Vijayawada  Vizag  Warangal  Tirunaveli STPI Centers: Nationwide spread PricewaterhouseCoopers | 3